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1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and enforce environmental law?

First, French environmental policy is based on European law, particularly on the Treaty on the Functioning of the European Union, as well as relevant regulations and directives. At the national level, the environmental code provides for the main regulations concerning environmental policy. The Environmental Charter adds key constitutional level principles such as the right to live in a balanced and healthy environment, the obligation for public authorities to act in line with the precautionary principle and the “polluter pays” principle.

At the national level, the Ministry of Environment, Energy and the Sea is in charge of managing and developing environmental policies in a number of fields including energy, climate change, air and water pollution, biodiversity, transport and urban development. At the local level, prefects (“préfets”), who represent the State, are vested with the power to administer and deliver permits for certain installations registered for the protection of the environment (“Installations Classées pour la Protection de l’Environnement”, “ICPE”), as well as for projects that could impact water resources. The competencies of local governments are residual.

1.2 What approach do such agencies/bodies take to the enforcement of environmental law?

Civil penalties and criminal fines can be imposed to secure the enforcement of environmental laws and permits. Certain serious and wilful violations can result in imprisonment (rare). Administrative sanctions are usually taken following on-site inspections revealing non-compliance with permits. The rehabilitation of a polluted site can also be ordered.

1.3 To what extent are public authorities required to provide environment-related information to interested persons (including members of the public)?

The Environmental Charter and the environmental code both grant the public with a general right of access to environment-related information held, received or established by public authorities. The conditions of such are governed by the code ruling over the relations between the administration and the public (“code des relations entre le public et l’administration”). It is worth noting that access may be limited to information whose communication does not present a threat to national security, defence or other secret information protected by law.

In addition, any public decision presenting an impact on the environment is subject to public participation. The public is also invited to submit comments on plans and projects that are likely to impact the environment through the process of public inquiries. Those are taken into account by the administrative authorities when taking their decision regarding the project.

Participation of the public and transparency in decision-making concerning environmental issues have been further reinforced by a 2016 ordinance that increases the dialogue ahead of the decision-making process, at a stage where future decisions can still evolve easily to take into account the observations of the public. Participation of the public is also made easier through its dematerialisation: the public will be able to provide feedback and comments via the internet.

2-Environmental Permits

2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another?

ICPE are subject to an integrated permit system that regulates all discharges (including air, water and soil) and other potential nuisances. Depending on the level of risk they present, they are either subject to declaration, registration or authorisation, each of these following a distinct administrative procedure. In most cases, permits can be transferred to a new operator provided that notice is given to the competent préfet within one month following this transfer. However, for certain facilities (those showing the highest level of risk), the transfer is subject to the préfet’s prior authorisation with a three-month notice.

Other installations and activities, including electricity generation facilities or activities likely to affect water quality, also require a permit or authorisation.

2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an environmental permit or in respect of the conditions contained in an environmental permit?

ICPE permits can be challenged by the petitioner before the competent administrative court within two months from their notification. This deadline is extended until six months as of the commissioning date if the commissioning did not take place within six months as of the publication of the ICPE permit. They can also be appealed by third parties, including interested municipalities, within one year of their publication.

2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly polluting industries or other installations/projects?

ICPE authorisation applicants are required to join an environmental impact assessment to their application. They are also required to provide a risk assessment.

Nonetheless, those are not the only projects that are subject to those types of requirements. Indeed, the environmental code lays down categories of projects that may have a significant impact on the environment or human health. Depending on their characteristics, such projects can either be automatically subject to an environmental assessment or after a case-by-case analysis performed by the Environmental Authority.

The environmental assessment must contain information regarding the impact of the installation or project on the environment, as well as the contemplated measures to avoid them and reasonable alternative solutions. Special requirements are added for transport infrastructures, ICPE and nuclear installations.

2.4 What enforcement powers do environmental regulators have in connection with the violation of permits?

The violation of a permit or operation without one can result in criminal sanctions including fines ranging from 75,000 to 300,000 Euros and/or imprisonment sentences up to four years. Those fines can be multiplied by five for convicted legal entities. Finally, in addition to those sanctions, parties can be ordered to suspend their activities for a maximum period of a year or what is required to rehabilitate the affected area.

Notwithstanding those criminal sanctions, the préfet may take administrative measures against an operator in breach of a permit. Once they identified an offence, administrative authorities can issue a formal notice to the operator. If the latter does not comply with the notice within the prescribed time, it can be subject to the following sanctions: mandatory deposit of a sum corresponding to the amount needed for the works to be implemented; suspension of the facility’s operation until it has complied with the imposed conditions; performance of the works by the authorities at the operator’s expense; as well as fines and daily penalties. In case of emergency, the administrative authority can set the necessary measures to prevent serious and imminent dangers to public health, security or the environment.

3 Waste

3.1 How is waste defined and do certain categories of waste involve additional duties or controls?

Waste is defined as any substance, object or, more generally, any movables which the holder discards or intends or is required to discard. The fact that the substance can or will be reused or recovered does not exclude it from the definition of waste nor does it release the holder from the obligations that come with it. Only when a substance has undergone a specific treatment and recovery process that makes it correspond to certain criteria will it cease to qualify as waste. Finally, when the substance is not likely to be reused or recovered under the current technical and economic conditions, it is considered to be ultimate waste.

Several categories of waste are subject to more stringent requirements. These are the following: hazardous waste; radioactive waste; used oil; medical waste; electrical and electronic equipment waste; household waste derived from particularly dangerous chemical products; as well as waste containing PCB.

3.2 To what extent is a producer of waste allowed to store and/or dispose of it on the site where it was produced?

Waste storage is only allowed at waste storage facilities. Unless the site qualifies as one of these facilities, waste cannot be stored there other than temporarily. Even so, producers are required to sort and safe store it pending its removal by certified contractors.

3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)?

Producers of waste remain responsible for its management until its elimination or final recovery, even when it is transferred for treatment to third parties. Hence, producers are jointly and severally liable with waste holders for any damage caused by the waste at stake. They shall ensure that their contractors are entitled to treat waste.

In case of unlawful waste management or disposal, public authorities may carry out the necessary measures at the producer’s or holder’s expense, suspend the facility’s operation and impose fines and daily penalties.

3.4 To what extent do waste producers have obligations regarding the take-back and recovery of their waste?

Waste elimination is considered as a last resort measure in the environmental code. Indeed, other methods should be favoured such as treatment for re-use, recycling or any other form of waste recovery, especially its use for energy purposes.

Moreover, under the producer’s enlarged responsibility principle, producers, distributors or importers of products generating waste can be required to take over or contribute to waste prevention and management. They can do so either by establishing individual systems of waste collection and treatment or by using collective treatment organisations. Those take-back schemes apply only to certain types of waste, including household waste deriving from chemical products, end-of-life vehicles, furniture and electronic equipment.

4-Liabilities

4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what defences are typically available?

Any violation or incident can trigger civil, administrative, criminal and environmental liabilities.

Through civil liability, third parties affected by environmental damage can seek compensation if they can prove wrongful or careless conduct, damage and causation. Where contributory negligence from the plaintiff can be proven, indemnities can be reduced. Another possibility is to resort to the “abnormal private nuisance” in the absence of any violation of the law or of a permit.

Those violations can also carry administrative liabilities consisting in various sanctions (facility’s operation suspension, fines, etc.) mentioned above. Those are usually triggered after a party fails to comply with a notice issued by the administration requiring that certain corrective measures be taken by the party.

Certain articles of the environmental code directly provide for criminal sanctions. Other than that, criminal liability can be brought on the basis of general criminal grounds, including the endangerment of a person’s life. Those sanctions consist in fines and/or imprisonment.

Finally, an environmental liability regime was created in 2008 that applies to direct and indirect damages caused to the environment. Those include deteriorations affecting soils and that could threaten human health, as well as water, species and natural habitats protected by the European Birds and Habitats Directives, and ecological services. For this type of liability, operators are required to take preventive measures to avoid the occurrence of the damage and, in case of damage, are required to rehabilitate the polluted site.

4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits?

Environmental permits are granted subject to the rights of third parties. As such, operation under and compliant with a permit does not constitute a safeguard against liability for environmental damage. French law does not have an equivalent to the “permit defence” system.

4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities?

First, directors and officers can be held criminally liable for the breach of an environmental regulation that provides for criminal sanctions. Moreover, if the damage they caused harmed a third party, D&Os can be held civilly liable. Nonetheless, claimants bear the somewhat difficult burden of proving that the damage resulted from an intentional and serious fault that was incompatible with the regular exercise of its corporate functions. For that reason, acting against the company in itself might be a more strategic recourse. Interestingly, a company can also be held criminally liable, along with or independently from their D&Os, for criminal offences committed by its representatives on their behalf.

D&Os can get insurance for criminal liability to the extent they can prove lack of intent to cause the damage. Insurance covering damages incurred by third parties can also be subscribed by the company on behalf of its D&Os.

4.4 What are the different implications from an environmental liability perspective of a share sale on the one hand and an asset purchase on the other?

Liability attaches to the current operator of a site, or the last operator if the site is not currently operated. In the context of a share sale, the operator does not change and, as such, liabilities fully remain with the entity at question. In the case of an asset purchase, a change of operator should be notified to (or more rarely authorised by) the competent authorities and all liabilities will be transferred to the new operator. Note that in case of pollution resulting from a previous activity conducted at the site and which is not carried on by the new operator, liability attaches to the operator having previously conducted the polluting activity which is not conducted by the current operator.

4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs?

In principle, lenders are not liable for their borrowers’ environmental wrongdoings. However, note that lenders could be found liable for those damages if they are shown to have had direct control over the polluter. Moreover, in certain circumstances, parent companies may be held liable for environmental damages caused by one of their bankrupted subsidiaries.

5-Contaminated Land

5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater?

Concerning soil pollution originating from an activity listed in article L.165-2 of the environmental code or from ICPE or nuclear installation, liability is attached to the current or last operator of the site (or to the one who substituted itself to the operator in case of ICPE installations) unless, as noted above (see question 4.4), in case of a change of activity. Where soil contamination has another origin, waste producers or holders could be liable. Furthermore, if none of the above parties can be held responsible, the owner of the polluted land is liable when negligent or involved in any manner in that pollution.

Where the liable person cannot be identified or is insolvent, the State can charge the Agency for the environment and energy control (“Agence de l’environnement et de la maîtrise de l’énergie” “ADEME”), or any other competent public entity, with the remediation of the site.

Note that, for ICPE installations, site contamination is mainly dealt with at the moment of site closure. Operators are responsible for the remediation of the site that should be left environmentally safe in accordance with its future intended use.

5.2 How is liability allocated where more than one person is responsible for the contamination?

Under the environmental liability regime, when environmental damage is caused by several parties, the prevention or remediation costs are allocated among the parties according to the contribution of their activity to the damage or its imminent threat.

Concerning ICPE installations in particular, site operators are the ones responsible for contamination. The last operator of the site remains liable after closure, regardless of a land sale, until a new operator takes over the installation. Once the change of operator is notified to (or authorised by) the competent authorities, the former operator is discharged from any liability for contamination towards authorities (save in case of change of activities, see section 4). Contractual agreements modifying this allocation of responsibilities are not enforceable towards authorities.

Landowners cannot be held liable per se under the ICPE installation regime. Nonetheless, their liability can be retained in certain circumstances under waste laws or the polluted sites regime.

5.3 If a programme of environmental remediation is ‘agreed’ with an environmental regulator, can the regulator come back and require additional works or can a third party challenge the agreement?

Remediation orders constitute unilateral administrative acts issued by the préfet that can be challenged before the administrative courts, including by third parties. Once the rehabilitation of the site is complete and where it is necessary for the protection of the environment, the préfet can still issue another order requiring additional work. In case the use of the site is modified at a later stage, no additional measures can be required from the last operator unless he is the one who decided the modification.

5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser?

The new operator of a site can act against the former one in several settings: breach of pre contractual information obligations; pollution caused by a former activity that he did not pursue; or non-compliance with site closure remediation obligations.

Through contractual clauses, the seller and the buyer of a contaminated land may allocate the risk of liability as they choose. Note, however, that those agreements will not be enforceable against third parties, including the administration. Finally, at the time of site closure, an interested party (usually a land developer) can be substituted to the last operator and bear all the remediation work, depending on his intended future use of the land. Should the substituting party fail to comply with its obligations or lack the necessary financial guarantees, the former operator will be the one liable for the rehabilitation of the site.

5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers?

Under torts, the government can claim damages if it suffered a prejudice (commercial, reputational, moral, aesthetic, etc.) as a result of harm caused to the environment. Moreover, the government can obtain monetary damages to compensate for an environmental harm in and for itself (the “ecological prejudice”) and not only through another type of prejudice exposed above. The notion of “ecological prejudice”, created by the courts following the “Erika” shipwreck, was indeed introduced in the Civil Code in 2016. Similarly, local governments are entitled to act against a party who caused damage to the environment on their territory, following a violation of environmental laws.

6-Powers of Regulators

6.1 What powers do environmental regulators have to require production of documents, take samples, conduct site inspections, interview employees, etc.?

Environmental inspectors are commissioned by public authorities and given authority to visit the installations and collect any information and documents they might need to fulfil their mission. In case the operator refuses access to the site to those agents, visits can be authorised by the competent court (tribunal de grande instance).

7-Reporting / Disclosure Obligations

7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties?

The environmental code lays down general prevention measures, including the obligation to report to the authorities any damage or persistent threat of damage to the environment. The operator is also required to take any measure to avoid the damage or remediate to it when it has already occurred.

This general obligation is also transposed in the provisions concerning ICPE installations. For those, the operator is under the duty to report any incidents resulting from the operation of the facility and that present a risk for public health, security or the environment. Similarly, reporting to the authorities of incidents likely to affect water quality and conservation is required.

7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for contamination?

ICPE installations, when filing for an environmental permit, must include a study of the condition of the land in their impact study. Moreover, in the course of operations and under certain circumstances, soil and water investigations can be ordered. For example, whenever a notable change occurs in operating conditions, the operator is under the obligation to conduct a soil pollution assessment. Finally, with the closure of such sites comes an obligation to investigate land for pollution and propose remedial measures.

Besides ICPE installations, those kinds of soil investigations are also required for any project happening on any site registered as polluted.

7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions?

The environmental code provides that if an ICPE installation has ever been active on a site, the seller of that site has an obligation to inform the buyer in writing. If not, and in case a pollution renders the site unfit for the use specified in the contract, the buyer can obtain, in a two-year period after the discovery of the pollution, the cancellation of the sale, the rehabilitation of the site at the seller’s expense or the restitution of part of the price.

Similarly, the seller or lessor of a land classified as one with a risk of soil pollution must inform the buyer or tenant.

In most cases, however, there is no particular obligation to report potential environmental risks. Nonetheless, provisions of the French Civil Code relating to good faith and information disclosure in contractual relationships can also be applicable. In any case, it is recommended to always conduct an environmental audit during the due diligence process to avoid any risk of future liability.

8-General

8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment-related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential liability for that matter?

Environmental indemnities can be used contractually and be enforceable between private parties. However, they do not discharge parties from liability towards third parties, including public authorities. Those will still be able to act against the party who is designated by law as being the one liable for the pollution in question.

8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order to escape environmental liabilities?

Dissolving of a company is subject to specific corporate rules laid down in the commerce code. Dissolving a company for the sole purpose of escaping environmental liabilities is most likely to be considered as fraudulent.

8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate?

In principle, shareholders are not liable for actions committed by the entity at stake. However, under provisions of the environmental code, the corporate veil may give in. Corporations that hold more than 50% of the capital of another company and having committed a fault resulting in their subsidiary’s insolvency may be responsible for the financing of all the environmental remediation measures falling to their affiliate.

Moreover, the environmental code defines the “operator” as being not only the actual one but also the person who exercises control over the activity. A parent company could be held liable in lieu of its subsidiary under that definition.

Under provisions of the civil code, French national courts have jurisdiction over cases in which the plaintiff or the defendant has French nationality.

8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters?

Before 2016, the law protected whistle-blowers who reported environmental and health-related violations. In 2016, a law was passed that extended protection to any person who reveals, selflessly and in good faith, any crime, misdemeanour or serious violation of the law, as well as any threat that could harm the public interest. Protections include preservation of their privacy, as well as protection from any sanction, dismissal or discriminatory measure taken on the grounds of those revelations.

8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary damages available?

A 2016 law created the mechanism of group actions in environmental matters for the first time. The field covered by this law is particularly broad and ranges from actions harming air and water quality to those relating to nuclear security. The admissibility of this environmental group action is subordinated to a proof of common standing, cause of harm and author of the damage. Those actions can only be brought by certain accredited nonprofits. Finally, the aim of those actions is to enjoin the termination of the action or breach at stake and/or to obtain damages.

Punitive damages are not applicable in the French jurisdiction.

8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when pursuing environmental litigation?

Individuals or public interest groups do not benefit from any exemption from liability to pay legal costs when pursuing environmental litigation. In civil and administrative proceedings, the costs are usually charged to the losing party and environmental associations could, as winning parties, be entitled to the recovery of the legal costs incurred, as part of the financial harm they suffered.

Meanwhile, in criminal proceedings, legal costs are ordinarily incurred by the State. It is important to bear in mind that abusive indemnification attempts by a party can result in legal costs being charged to that party.

9-Emissions Trading and Climate Change

9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading market developing there?

France participates in the European Union Emissions Trading System (EU ETS), a carbon market that was set up in 2005 to meet the European Union’s commitments under the Kyoto Protocol. This system functions as a cap-and-trade programme. Indeed, the European Union imposes a limit on the total amount of emissions coming from industries enrolled (thermoelectric, cement, refinery, aviation, etc.). Those are then allocated quotas corresponding to a certain level of emissions. If their emissions go beyond this level, they are required to obtain the quotas corresponding to this excess. To cover their emissions, companies are given two options: buy allowances on the carbon market from industries emitting less than required or buy international credits (in limited amounts) from emission-saving projects in other parts of the world. The price of a tonne of carbon is currently very low and fluctuates around five Euros per tonne on the ECX, a platform for carbon emissions trading.

Over the years, the sum of quotas allocated free of charge and the cap set on emissions have been decreasing while the scope of application (both in terms of gases covered as well as sectors and countries included) of EU ETS has expanded.

9.2 Aside from the emissions trading schemes mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions?

Private entities employing more than 500 people (or more than 250 people if the entity is located outside Metropolitan France) as well as the State, certain decentralised public authorities and public entities employing more than 250 people are required to establish an assessment of their greenhouse gas emissions. This appraisal is made public and updated every four years for private entities and every three years for public ones. The record is also sent to the competent administrative authority.

9.3 What is the overall policy approach to climate change regulation in your jurisdiction?

France has been accelerating the development of environmental policies since a 2001 law making the fight against climate change a national priority. Through the adoption of climate plans, revised every other year, as well as with the Grenelle I and II legal frameworks, France has committed to numerous matters including emissions reduction, waste recovery and biodiversity conservation. More recently, a law for the energy transition towards green growth was adopted with commitments to cut GHG emissions by 40% by 2030 (as compared to 1990 levels) and to reduce the share of the nuclear sector in terms of electricity production.

10-Asbestos

10.1 What is the experience of asbestos litigation in your jurisdiction?

In 2000, a compensation fund (FIVA) was created to compensate asbestos victims. Eligible beneficiaries must seek indemnities by filing an application for compensation with the FIVA. They can also initiate litigation against their past employer in order to obtain indemnities. However, once the victim has been compensated by the FIVA, the damages it might obtain through legal action will be allocated to the reimbursement of the costs incurred by the FIVA, unless the court decides to provide the victim with an additional compensation.

Litigation has mostly developed against employers, who can be held liable on gross negligence grounds. Note that gross negligence was almost systematically assessed, whenever an employee had contracted an asbestos-related disease in the workplace. However, a 2015 decision now suggests a relaxing of that rule: wherever an employer can prove he took all the necessary and legally imposed security measures to avoid the risk, he will not be held liable. Workers who have not yet developed any disease but have been exposed to asbestos in certain listed facilities are also automatically entitled to compensation from their employer under an “anxiety prejudice”.

Criminal convictions have been more uncommon so far.

10.2 What are the duties of owners/occupiers of premises in relation to asbestos on site?

Since 1997, materials containing asbestos may no longer be produced nor used in France. However, asbestos is still present in many buildings constructed before that date.

Owners of properties built before that date face the obligation to perform a tracking on components identified in the code of public health in order to assess the potential presence of asbestos. The results of this tracking will determine whether or not additional actions (periodic evaluations, containment or removal work, etc.) are necessary. This information must all be kept in an “asbestos file”, accessible to different parties. Special requirements are imposed at the time of sale or demolition.

Under the labour code, employers have duties to conduct risk assessment concerning asbestos.

11-Environmental Insurance Liabilities

11.1 What types of environmental insurance are available in the market, and how big a role does environmental risks insurance play in your jurisdiction?

Insurance against nuclear risks and hydrocarbon sea pollution is mandatory. In addition to this, optional environmental insurance has developed. The two main ones are the civil responsibility insurance for environmental damage and the environmental responsibility insurance. The first one includes damages suffered by third parties and caused by environmental damages created by the entity; the second covers environmental damages that did not harm any third party. Note that none of those cover environmental damages caused by intentional fault, violations of the law or poor maintenance condition of the facility.

11.2 What is the environmental insurance claims experience in your jurisdiction?

There does not seem to be any particularity to the environmental insurance claims experience and any disagreement between the insured and his insurance are settled by the competent judge.

12-Updates

12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in Environment Law in your jurisdiction.

The law for the restoration of biodiversity, nature and landscapes was passed in August 2016 and inscribed the ecological prejudice in the Civil Code. It also led to the creation of the French Agency for Biodiversity whose mission is to reinforce environmental public policies and to mobilise civil society in the fight against erosion of biodiversity.

Starting in March 2017, a new procedure for environmental authorisations will be established. ICPE installations and installations regulated under the law on water will be subject to only one unified environmental authorisation. This new procedure will serve as a substitute for all the procedures those installations previously had to go through individually (for example, the authorisation to use Genetically Modified Organisms (GMO), specific authorisations for natural reserves or waste processing agreements).

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